3
3 Never had there been so much democracy in the continent Source: OECD Development Centre, 2007. Based on Polity IV project. Note: Polity2 score shown, average of available data for Latin America. Poilty2 is the sum of two indicators democracy (0 to10) and autocracy (0 to -10 ). These indicators focus on institutionalized aspects of the polity, i.e. de jure. Democracy is conceived as three essential, interdependent elements. One is the presence of institutions and procedures through which citizens can express effective preferences about alternative policies and leaders. Second is the existence of institutionalized constraints on the exercise of power by the executive. Third is the guarantee of civil liberties to all citizens in their daily lives and in acts of political participation. The autocracy index focuses on how restricted political participation is; whether chief executives are chosen in a regularized process of selection within the political elite, and once in office they exercise power with few institutional constraints; and whether they exercise a high degree of defectiveness over social and economic activity. The 1980s represent a dramatic turn around for the region in terms of polity Democracy Autocracy

4
4 The region has left the 1980s behind and is recuperating grown in GDP per capita terms Source: OECD Development Centre, 2007. Based on Angus Madison, Historical Statistics. The World Economy, Paris, OECD, 2003; and Polity IV project. Data is average of available data. The 1980s were lost in terms of GDP per capita but not in terms of political reform

5
5 Democracy is alive and well: Elections are competitive affairs Source: OECD Development Centre, 2007. Based on Daniel Zovatto Balance Electoral de América Latina 2005 /2006, in Latinobarómetro, Executive Report 2006, Political Database of the Americas and Wikipedia (when based on official results). Note: Support is the share of votes of the election winner and margin is the difference with the second highest recipient of votes. Continuity Change Support (% votes) Margin (% victory) 1st round5019 2nd round519 Number of countries Share (%) Continuity844 Change1056

6
6 Source: OECD Development Centre based on CEPALSTAT y ECLACs Panorama Social de América Latina 2006 and official press release of the Presidency of Chile, 23 September 2007. % GDP annual growth Growth has resumed … but it is still far from other emerging economies China India Latin America

7
7 Latin American economies have been loosing grown for some time Source: OECD Development Centre, 2007. Based on Maddison (2003). GDP per capita absolute termsGDP per capita relative to US Plebiscite in Chile, 1988

10
10 Source: OECD Development Centre, 2007. Based on CEPALSTAT y ECLACs Panorama Social de América Latina 2006. % population in poverty Poverty is falling but it still affects a large portion of the population Millions of people in poverty

11
11 Source: OECD Development Centre, 2007. Based on CEPALSTAT y ECLACs Panorama Social de América Latina 2006. Improvements in inequality are modest or absent deteriorations improvements Changes in inequality during the last decade

12
12 Source: CEPALSTAT y ECLACs Panorama Social de América Latina 2006 and official press release of the Presidency of Chile, 23 September 2007. There is no mature and constructive democracy when equity and social justice are not tackled …our democracies have not been efficient … they have not managed to rapidly improve the living condition of the people, especially of those in most need, and the political consequences are visible today. President Michelle Bachelet at the European Union - Latin America Forum on Social Cohesion

14
14 Source: OECD Development Centre, 2007. Based on data by Goñi, López, and Servén (2006) Fiscal policy plays a very limited redistributive role, especially taxation Gini coefficient Inequality before and after taxes and transfers Points of Gini change (% change in inequality) The effects of taxes and transfers

15
15 Source: OECD Development Centre, 2007. Based on data by Goñi, López, and Servén (2006). Gini coefficient There is no Latin curse: Quality fiscal policy is not a matter of DNA Inequality before and after taxes and transfers

17
17 Source: OECD Development Centre, 2007. Based on Filc and Scartascini (2007), Budgetary Institutions in Lora, The State of State Reform in Latin America, IADB and Stanford University Press Note: To construct the figure, the reforms were weighted in accordance with their relevance and direction and were normalized between 0 and 1. So, each curve shows the transition of the institutions from their initial situation in 1990 to their situation in 2005. The slope measures the number of reforms and their relative importance. The path of reform for fiscal institutions Reform has succeeded in strengthening fiscal institutions

20
20 Source: OECD Development Centre, 2007. Based on Jiménez, J. P. V. Tromben. Fiscal policy and the commodities boom: the impact of higher prices for non- renewables in Latin America and the Caribbean. Cepal Review 90. December 2006. Revenues from non-renewable as a share of total fiscal revenue (1990-2005) Coefficient of Variation in fiscal revenues (1990-2005) Revenue systems lean on commodities and produces unpredictability

21
21 % of citizens who trust tax revenue is well spent (2003-05) Source: OECD Development Centre, 2007. Based on Latinobarómetro (2003, 2005) and World Bank Institute, Governance Indicators Database. Based on World Economic Forum, Global Competitiveness Report, 2003-2006. The result is very limited political capital to work with… fiscal legitimacy is low Firms assessment of the neutrality/composition of government decisions/spending (2003-2006) Fairer/ Wiser Unfair/ Wasteful

28
28 Source: OECD Development Centre, 2007. Based on Latinobarómetro (2003) and ECLACs Panorama Social. Social spending is regressive Specially social security

29
29 Source: OECD Development Centre, 2007. Based on Freedom House (2007) and ECLAC and OECD Revenue Statistics (2007). Policy dialogue and openness is key for financial accountability

30
30 Source: OECD Development Centre, 2007. Based on Freedom House (2007). Venezuela Chile LatAm avge Not free Partially free Free 1988 Chiles plebiscite The democratic transition has not resulted in an overall transition in the media

31
31 Source: OECD Development Centre, 2007. Based on ECLACs ILPES and Latinobarómetro (2003, 2005). Relaying more on taxes to finance public spending enhances fiscal legitimacy Relative price of government services (share of taxes on total spending) Fiscal legitimacy (% trust taxes well spent)

32
32 Source: OECD Development Centre, 2007. Based on ECLAC ILPES database and Payne et al. (2007) Democracies in Development - Politics and Reform in Latin America International IDEA. Fiscal policy is a powerful tool to promote democratic participation Relative price of government services (share of taxes on total spending) Voter turnout (2000-05 presidential elections)

33
33 Conclusions Democracy puts fiscal policy at the heart of the relationship between the state and its citizens Building broad consensus is paramount to success in the implementation of fiscal reforms Local Think-Tanks can play a crucial role in fostering constructive dialogue over policy options, if they can count with financial independence It not a technical but rather a political issue